Lessons in IT Innovation From Silicon Valley

Innovation is always infectious. But our recent research has taught us a lot about how management innovations can travel — in this case, from Silicon Valley tech sector companies known for their experimentation and agility in information technology (IT) management to the much older Bay Area companies who are their neighbors.

The IT departments of Oakland-based The Clorox Company and San Francisco-based Gap Inc. are among those who are consciously borrowing from the newer playbook, learning from the technology practices and culture of their counterparts at the tech firms in Mountain View and Palo Alto. In doing so, these more traditional companies are not only increasing their competitiveness but also making make themselves more attractive to a new generation of IT workers, their chief information officers say.

“People in the Valley take a different approach to things,” Ralph Loura, the CIO of Clorox, told us. “I can tap into that rich source of innovation and startups and find creative solutions. Being right here at the doorstep of most venture capital firms and people trying to solve today’s technology problems is a real advantage.”

The Accenture Institute for High Performance conducted a study of Silicon Valley IT practices in the past year because we thought the Valley’s IT departments — just by virtue of where they resided — would be ahead of the pack in important aspects of enterprise technology. In many ways, the interviews we did with the CIOs of Google Inc., Facebook Inc., and more than thirty other technology executives bore that out. But our conversations with Clorox, Gap Inc. and CAMICO Mutual Insurance were especially interesting because of the insight they offered into how traditional IT departments might evolve.

Turning IT into an Agile Business Process

At Clorox and Gap Inc., the IT departments have adopted an agile, speed-it-up mentality that seems Valley-like. Clorox, a maker of bleach and other household products which has been in business for 100 years, seeks to get faster by using preconfigured cloud computing solutions and infrastructure, much like Silicon Valley companies do. Gap Inc. is deliberately getting its infrastructure more in line with what Internet companies do by replacing as much proprietary technology as it can, including in its data centers, with open-source software and infrastructure. The company has also beefed up its software testing and release management capabilities. “This is difficult and hard work, but it is going to pay off enormously to the company, in that we’re going to be able to move much faster with a lot less cost,” says Tom Keiser, the retailer’s CIO.

To turn IT processes into agile business processes, both of these companies are stepping back from the more conventional waterfall software development commonly found in the corporate world, and turning to the ways of the tech firms: agile, scrum-style development with deliverables rolling out every couple of weeks.

“What we’re trying to do is get to a point where we can deliver new capabilities into our stores not every year, but every few weeks,” Keiser says.

For its part, Clorox’s IT department uses what Loura calls a “scrum-style model,” a form of agile management in which developers sit regularly with business-side colleagues to show how an application is progressing and increase the likelihood the finished product will serve business needs. “You put up something quick and dirty, learn from it, and in the next iteration improve on it,” Loura says.

Learning from Innovation in Silicon Valley

The IT departments of some nearby companies are also influenced by the innovation in Silicon Valley, and by how technologists there network and manage.

CIOs network with Valley technology leaders and venture capitalists in search of creative solutions to traditional IT problems. Take Clorox: Using his connections, Loura collaborated with several early-stage startups “that are solving problems for us that would have been difficult to solve otherwise.” A breakfast with a CIO working for a Silicon Valley tech company helped him find an answer to a common problem: coping with frustrated managers whose projects got pushed down the priority list. His Valley peer convinced him to see his PR problem in a new light: as, in part, a problem of transparency. Loura began to use visualization tools to show managers why other projects rose further up the queue. “This way, even if they’re not happy about it, they can understand why and be supportive of the decision from a company perspective,” Loura says. This kind of open sharing of information is a hallmark of innovation in Silicon Valley.

CIOs in sectors not known as innovation hot spots are trying to be more like their Valley neighbors. Consider CAMICO Mutual Insurance of San Mateo, a liability insurer for CPAs: Inspired by his Silicon Valley neighbors, the company’s CIO launched a bottom-up innovation program to encourage employees, beginning with his 13-person IT department, to try out new ideas. Several ideas for digitizing paperwork got quickly implemented, saving CAMICO Mutual $300,000 a year, says vice president of IT and eCommerce Jag Randhawa.

In the last couple of years, Loura and Gap Inc.’s Keiser shifted to open floor plans for their departments, scrapping the model of fixed offices and high cubicles in favor of open space for brainstorming and closer seating for teams. This office design isn’t found only in Silicon Valley, but it is often used there to encourage collaboration. It is seen as having similar potential at Clorox and Gap Inc.

Not every IT worker at the companies has been happy about the resulting loss of privacy. But many workers focus on the upside — improved face-to-face communications — and see this and other changes, including flexible hours, support for consumer devices such as tablets, and a more sophisticated use of videoconferencing for collaboration, as signs their decades-old companies are becoming cooler places to work. “I think our embrace of this new working environment will appeal more directly to a coming generation of employees, Millenials and beyond,” Loura says. “They’re looking for a different environment.”

Indeed, these executives seem to think that by replicating some aspects of Valley culture they can attract talent that would otherwise head for high-tech companies. They can also develop faster and more innovative ways to move their businesses forward. Given how well it’s worked for innovation in Silicon Valley’s fast growing technology companies, maybe they’re on to something.

Based in Chicago, Jeanne G. Harris is global managing director of information technology research at the Accenture Institute for High Performance.
Based in Boston, Allan E. Alter is a research fellow at the Institute.